NextEra Energy Resources, LLC v. Department of Public Utilities

NOTICE: All slip opinions and orders are subject to formal
revision and are superseded by the advance sheets and bound
volumes of the Official Reports. If you find a typographical
error or other formal error, please notify the Reporter of
Decisions, Supreme Judicial Court, John Adams Courthouse, 1
Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-
1030; SJCReporter@sjc.state.ma.us

SJC-12886

NEXTERA ENERGY RESOURCES, LLC vs. DEPARTMENT OF PUBLIC
UTILITIES & others.1

Suffolk. April 9, 2020. - September 3, 2020.

Present: Gants, C.J., Gaziano, Lowy, Budd, Cypher,
& Kafker, JJ.

Electricity. Electric Company. Public Utilities, Electric
company, Electrical transmission line, Sale of electric
power. Administrative Law, Agency's interpretation of
statute, Agency's interpretation of regulation.

Civil action commenced in the Supreme Judicial Court for
the county of Suffolk on July 22, 2019.

The case was reported by Lowy, J.

Donald E. Frechette for the petitioner.
Gerald J. Petros, Special Assistant Attorney General, for
the respondent.
Jared S. des Rosiers, of Maine, Andrew O. Kaplan, Joshua D.
Dunlap, Jed M. Nosal, & Jesse S. Reyes, for Central Maine Power
Company, intervener, submitted a brief.

1 Central Maine Power Company, intervener; NSTAR Electric
Company, doing business as Eversource Energy, intervener;
Massachusetts Electric Company and Nantucket Electric Company,
each doing business as National Grid, interveners; and Fitchburg
Gas and Electric Light Company, doing business as Unitil,
intervener.
 2

John K. Habib, Matthew S. Stern, Danielle C. Winter,
Matthew Campbell, & Patrick H. Taylor, for NSTAR Electric
Company & others, interveners, submitted a brief.
Mark C. Kalpin, Brett D. Carroll, & Christopher M.
Iaquinto, for New England Power Generators Association, Inc.,
amicus curiae, submitted a brief.

KAFKER, J. This case concerns recent legislation intended

to facilitate the development of hydroelectric and other clean

energy sources by requiring electricity distribution companies

in the Commonwealth to contract for the purchase of electricity

generated through environmentally friendly means. The

challenged power purchase agreements (PPAs) would allow

electricity distribution companies to purchase clean electricity

generated hydroelectrically by Hydro-Québec Energy Services

(U.S.), Inc. (HQUS); this electricity would be supplied to New

England via a transmission line running from Québec to Maine.

According to the petitioner, NextEra Energy Resources, LLC, the

PPAs at issue are inconsistent with statutory requirements that

such agreements provide for "firm service" hydroelectric

generation -- a term referring to hydroelectric power that is

provided without interruption -- and that such generation be

solely hydroelectric. Additionally, the petitioner objects to

the PPAs' use of the New England Power Pool (NEPOOL) Generation

Information System (GIS), a tracking system intended to account

for each unit of electricity transmitted, claiming the tracking

system is inadequate to ensure statutory compliance.
 3

In its order, the Department of Public Utilities

(department) concluded that the PPAs allowed for electricity

delivery to be interrupted only in limited circumstances, and

that provisions requiring HQUS to cure delivery shortfalls or

pay damages create an appropriate incentive for HQUS to deliver

energy and fulfill firm service requirements. Shortfalls were

carefully circumscribed by the agreements, encompassing only a

narrow set of circumstances outside HQUS's control. The

department also concluded that the PPAs provide for delivery of

energy generated by sixty-two specified hydroelectric generating

facilities operated by HQUS, and the NEPOOL GIS tracking system

was sufficient as it was the industry standard.

We affirm the department's order approving the PPAs. We

conclude that the department reasonably and realistically

interpreted the firm service requirement. We also uphold the

department's conclusions that the PPAs guarantee electricity

generated solely from hydroelectric generation and that the

NEPOOL GIS tracking system is an adequate means to ensure the

required accounting. These rulings were supported by

substantial evidence and sufficient rationale.2

2 We acknowledge the amicus brief submitted by New England
Power Generators Association, Inc. As is "[u]sually" the case,
amicus argument "is limited to only those issues addressed by
the parties" (citation omitted). Teamsters Joint Council No. 10
v. Director of the Dep't of Labor & Workforce Dev., 447 Mass.
100, 100 n.2 (2006). We therefore decline to address the
 4

1. Background. In 2008, the Legislature passed St. 2008,

c. 169, entitled "An Act relative to green communities," to

"provide forthwith for renewable and alternative energy and

energy efficiency in the commonwealth."3 In 2016, the

Legislature passed St. 2016, c. 188, entitled "An Act to promote

argument that the power purchase agreements (PPAs) did not
contract for incremental clean energy, i.e., more energy than is
otherwise available to the market in the Commonwealth, as this
argument was raised only by the amicus. See Finch v.
Commonwealth Health Ins. Connector Auth., 459 Mass. 655, 669
n.13 (2011); General Mills, Inc. v. Commissioner of Revenue, 440
Mass. 154, 167 n.7 (2003), cert. denied, 541 U.S. 973 (2004).

3 The Legislature passed this act the same year that it
passed St. 2008, c. 298, the Global Warming Solutions Act
(GWSA). "Each act addresses a separate but related piece of the
clean energy economy," and both "provide policymakers with a
broad array of tools, including 'targeted and technology-
specific policies[,] . . . economy-wide and market-based
mechanisms,' and renewable energy portfolio standards and energy
efficiency improvements, to advance a clean energy economy while
reducing emissions and addressing the unique threats that
climate change poses to the Commonwealth." Kain v. Department
of Envtl. Protection, 474 Mass. 278, 282 (2016), quoting Report
of the Senate Committee on Global Warming and Climate Change, No
Time to Waste, at 10 (Feb. 13, 2015); Executive Office of Energy
and Environmental Affairs, Massachusetts Clean Energy and
Climate Plan for 2020, Executive Summary, at 7 (Dec. 29, 2010).
The GWSA was "designed to make Massachusetts a national,
and even international, leader in the efforts to reduce the
greenhouse gas emissions that cause climate change," and
"establishes significant, ambitious, legally binding, short- and
long-term restrictions on those emissions" (quotation omitted).
New England Power Generators Ass'n, Inc. v. Department of Envtl.
Protection, 480 Mass. 398, 399 (2018). The GWSA mandates a
twenty-five percent reduction from 1990 greenhouse gas emission
levels by 2020 and an eighty percent reduction by 2050. G. L.
c. 21N, §§ 3, 4. Statute 2018, c. 169, and the provisions at
issue in this case play an essential role in achieving these
objectives by requiring the generation of clean energy.
 5

energy diversity," which, among other changes, amended St.

2008, c. 169, by setting up a competitive bidding process for

contracts to finance the production of clean energy. St. 2016,

c. 188, § 12. This amendment was effectuated by adding §§ 83B

and 83D to St. 2008, c. 169 (Sections 83B and 83D). Id.

Section 83D required electric distribution companies to

jointly and competitively solicit proposals for eligible clean

energy generation resources no later than April 1, 2017, and,

provided reasonable proposals had been received, to enter into

cost-effective, long-term contracts -- known as PPAs -- to

facilitate the financing of clean energy generation resources

equal to approximately 9.45 million megawatt-hours (MWh) per

year by December 31, 2022. As required by statute, the

department must approve a PPA before it can become effective.

See Section 83D (e); 220 Code Mass. Regs. § 24.03 (2017).

"Clean energy generation" includes "firm service hydroelectric

generation," which Section 83B defines as "hydroelectric

generation provided without interruption for [one] or more

discrete periods designated in a long-term contract."4 The

4 Regulations promulgated by the Department of Public
Utilities (department) define firm service hydroelectric
generation as "hydroelectric generation provided without
interruption for one or more discrete periods designated in a
long-term contract, including but not limited to multiple
hydroelectric run-of-the-river generation units managed in a
portfolio that creates firm service though the diversity of
multiple units." 220 Code Mass. Regs. § 24.02 (2017). That
 6

phrase "without interruption" is not defined by statute or the

accompanying regulations.

On July 23, 2018, NSTAR Electric Company, doing business as

Eversource Energy; Massachusetts Electric Company and Nantucket

Electric Company, each doing business as National Grid; and

Fitchburg Gas and Electric Light Company, doing business as

Unitil (companies), filed separate petitions with the

department, pursuant to Section 83D and 220 Code Mass. Regs.

§§ 24.00 (2017), for approval of individual PPAs for the

purchase of hydroelectric generation and associated

environmental attributes from HQUS. The PPAs were negotiated

and submitted to the department after the companies and the

Department of Energy Resources (DOER) selected a project

submitted jointly by Hydro Renewable Energy, Inc., an HQUS

affiliate, and Central Maine Power Company (CMP) after a three-

stage bidding process.5

Under the PPAs, the power will be delivered to New England

over a transmission line that starts at a substation in Thetford

description applies here, as Hydro-Québec Energy Services
(U.S.), Inc. (HQUS), will provide the energy guaranteed under
the PPAs from sixty-two specified hydroelectric generating
facilities.

5 The three-stage bidding process, initiated by a request
for proposals, met the requirements of St. 2008, c. 169, § 83D,
as inserted by St. 2016, c. 188, § 12 (Section 83D), and is not
at issue in this appeal.
 7

Mines, Québec, and runs sixty-five miles to the Canada-Maine

border. The power would then be transmitted by means of a new

transmission line owned by CMP, named New England Clean Energy

Connect, that travels another 145 miles to a substation in

Lewiston, Maine. The PPAs specifically provide for a twenty-

year service term beginning on the commercial operation date.

The material terms of the three PPAs are nearly identical.

We describe those terms only as they relate to this appeal. The

PPAs provide that HQUS's obligations to sell and deliver

hydroelectric-generated energy, and the companies' obligations

to buy the same, "are firm and not subject to interruption

except to the extent caused by Force Majeure, excused under

Section 4.2(a)[6] or cured in accordance with Section 4.3(c)

[governing curable delivery shortfalls]."

"Curable delivery shortfalls" under section 4.3(c) of the

PPAs are shortfalls that result from (1) nonexcused outages,

i.e., outages or reductions in total transfer capacity other

than outages or reductions caused by force majeure, scheduled

maintenance, regulatory decisions, or outages in the

transmission line from Québec to the Canada-Maine border; or

(2) outages or reductions in that same transmission line due to

6 Outages or reductions below capacity caused by force
majeure, scheduled maintenance, regulatory decisions, or outages
in the transmission line from Québec to the Canada-Maine border
are referred to as "excused outages" in the PPAs.
 8

a physical condition affecting its transfer ability. The PPAs

allow HQUS to cure these shortfalls by delivering qualified

shortfall energy7 during the shortfall cure period.8

Under the PPAs, "uncured delivery shortfalls" are delivery

shortfalls HQUS has not cured by the delivery of qualified

shortfall energy. Shortfalls that are not cured must be

remedied by cover damages. These damages include any penalties

or additional costs incurred by the companies as a result of

having to purchase replacement energy. Additionally, under

section 9.2(f) of the PPAs, if "[t]he aggregate Uncured Delivery

Shortfalls in any Shortfall Cure Period are more than twenty

percent (20%) of the Guaranteed Qualified Clean Energy for such

Shortfall Cure Period (a 'Defaulted Delivery Shortfall')," HQUS

has defaulted on the PPAs. Only shortfalls due to transmission

line failures are counted when calculating the ratio of

defaulted delivery shortfalls. In other words, section 9.2(f)

7 Qualified shortfall energy is hydroelectric energy
delivered over any transmission line to the companies during the
twenty-year term of the PPAs. This energy must also be tracked
in GIS to ensure it is hydroelectric-generated energy.

8 A shortfall cure period is defined in the PPAs as "the
same Contract Year in which the Curable Delivery Shortfall
occurred or in the immediately succeeding Contract Year."
 9

does not encompass any decision by HQUS to sell the power to a

third party.9

The PPAs further provide that HQUS is responsible for

maintaining participation in NEPOOL GIS "to register, monitor,

track, and transfer Environmental Attributes" in order to

demonstrate that the energy delivered is qualified clean energy.

NEPOOL is an industry association of energy market participants

in the New England region. See 310 Code Mass. Regs. § 7.75(2)

(2020). NEPOOL GIS is a database and certificate system

operated by NEPOOL. See id.; Jones, James, & Huebner, Do You

Know Who Owns Your Solar Energy? The Growing Practice of

Separating Renewable Attributes from Renewable Energy

Development and Its Impact on Meeting Our Climate Goals, 28

Fordham Envtl. L. Rev. 197, 216-217 (2017) (Jones). The NEPOOL

GIS tracking system has been employed and relied on by State and

Federal regulators and generators for nearly twenty years to

track renewable energy generation and its environmental benefits

in New England. The system accounts for the environmental

attributes associated with each MWh of electricity produced.

Jones, supra. Those attributes are recorded in the form of a

certificate, which may be used to substantiate and track

9 Instead, a decision by HQUS to sell the power to a third
party would constitute a breach of the agreements, and would not
constitute a delivery shortfall remediable by cover damages.
 10

compliance with environmental regulations.10 Id. See 310 Code

Mass. Regs. § 7.75(2).

The department held a joint public hearing and procedural

conference for the companies' petitions on August 15, 2018. It

granted the petitioner's petitions to intervene as a full party

in each of the three dockets. The department held joint

evidentiary hearings on the three dockets in February 2019. It

received testimony from fourteen witnesses at the hearings,

including three witnesses called by the petitioner.

10These certificates, also referred to as credits, function
as an independent form of property right and may be sold to
third parties separately from the electricity to which the
certificates relate: the certificates have value to these third
parties because they may use those certificates to comply with
environmental regulations or qualify for legal benefits. See,
e.g., Indeck Me. Energy LLC v. Comm'r of Energy Resources, 454
Mass. 511, 512–513 (2009) (explaining that certificate, "once
purchased, is counted toward [an] electricity supplier's
compliance" with environmental laws); Jones, James, & Huebner,
Do You Know Who Owns Your Solar Energy? The Growing Practice of
Separating Renewable Attributes from Renewable Energy
Development and Its Impact on Meeting Our Climate Goals, 28
Fordham Envtl. L. Rev. 197, 197–198 (2017) (Jones).

NEPOOL GIS users are bound by a complex set of operating
rules that, among other things, govern how certificates are
created, how certificates may be transferred, and how the
department, DEP, and other regulatory agencies may access
information on the system's database. See, e.g., New England
Power Pool Generation System Operating Rules, Rules 2.1, 3.1,
5.3 (Jan. 1, 2020). The department (formerly the Department of
Telecommunications and Energy Resources) helped develop these
rules. New England Generation Information System, D.T.E. 03-62-
A, at 9, 24 n.14 (2004).
 11

On June 25, 2019, the department issued its order approving

the PPAs. It concluded that the PPAs provide firm service

hydroelectric generation without interruption from hydroelectric

generation alone as required by Section 83D. It further found

that the PPAs included "a schedule of guaranteed qualified clean

energy to be delivered from HQUS on a monthly basis for each

year of the contract term."

The department determined that the PPAs allowed electricity

delivery to be interrupted in only three circumstances: (1)

force majeure; (2) deliveries excused during negative locational

marginal pricing (LMP) periods11; and (3) curable delivery

shortfalls. The department explained that the provisions in the

PPAs requiring HQUS to cure delivery shortfalls were consistent

with Section 83D's firm service requirement. It reasoned that,

"[g]iven the nature of electricity transmission, delivery

11Locational marginal pricing (LMP) is a method of pricing
electricity based on its value at different times and locations.
See Sacramento Mun. Util. Dist. v. Federal Energy Regulatory
Comm'n, 616 F.3d 520, 524-525 (D.C. Cir. 2010) ("LMP consists of
three components: [i] the cost of generation; [ii] the cost of
congestion; and [iii] the cost of transmission losses").
Negative LMP periods are periods in which the supply of
electricity is greater than demand. The department concluded
that the delivery of electricity generated in such periods would
be wasteful. Cf. Barton Windpower, LLC vs. Northern Ind. Pub.
Serv. Co., U.S. Dist. Ct., No. 13-CV-5329 (N.D. Ill. June 18,
2018) ("When the LMP is negative, market participants . . . can
stop generating power, or they can continue to generate power
and sell it to [the system operator] at the negative price
[i.e., pay [the system operator] to take the power]").
 12

shortfalls will occasionally happen," and therefore "any long-

term contract for renewable energy generation requires

reasonable provisions to address them." The department found

that the PPAs' curable delivery shortfall provisions

appropriately "allow HQUS to fulfill its firm delivery

obligations while reasonably accommodating transmission outages

that are not within its direct control."

Relatedly, the department also found that the cover damages

provisions requiring HQUS to pay damages in the event that it

fails to cure a shortfall "reasonably support the PPAs' firm

energy delivery provision by (1) providing an appropriate

incentive for HQUS to deliver energy during the winter months

(and otherwise)[12] and (2) making ratepayers financially whole in

the event that an uncured delivery shortfall should occur."

The department also concluded that the PPAs require HQUS to

deliver, and the companies to purchase, energy derived solely

from hydroelectric generation, as required under Section 83D.

12The PPAs contain provisions that guarantee energy
delivery on a year-round basis, including in winter months. The
department rejected the petitioner's argument that the delivery
shortfall provisions would allow HQUS to curtail delivery during
winter months because it found that the PPAs "limit the delivery
of qualified shortfall energy to the same season-peak period as
when the curable delivery shortfall occurred, in [either] the
same year or the immediately succeeding contract year."
Additionally, the PPAs provide a method for reconciling
differences in the economic value of the energy that was to be
delivered when the shortfall occurred and the energy actually
delivered to cure the shortfall.
 13

It based this finding on the fact that the PPAs require all

energy deliveries to derive from "energy produced by a

hydroelectric generating resource," particularly the sixty-two

specified hydroelectric generating facilities operated by HQUS.

Although the PPAs describe these facilities as "consist[ing]

predominantly of low-carbon and renewable hydro-electric energy"

(emphasis added), the department dismissed the petitioner's

argument that the use of the term "predominantly" would leave

HQUS free to deliver energy from non-hydroelectric sources. It

rejected this argument because the PPAs "unambiguous[ly]"

require that any energy sold be from clean, hydroelectric

generation.

Finally, the department concluded that the PPAs provide the

energy generated must "be tracked in the NEPOOL GIS to ensure a

unit-specific accounting" of the delivery of qualified clean

energy (footnote omitted).13 The department therefore concluded

that the PPAs complied with Section 83D (j)'s requirement of

unit-specific accounting for clean energy delivery. The

department also found that NEPOOL GIS, "a well-established power

13"Unit energy" is energy imported into New England that is
generated by specifically identified generation units assigned
certificates for their respective, specific environmental
attributes. "System energy," on the other hand, is power
imported into New England without specifically identifying the
specific generation unit. For such energy, NEPOOL GIS assigns
the characteristics of the over-all mix of the fuel source and
emissions of the source control area.
 14

generation and associated environmental attribute tracking

system used in the New England region," adequately ensured that

"the Companies purchase clean energy generation as defined by

statute, and not system energy that contains non-clean energy

generation."

After the department issued its order, the petitioner

appealed to a single justice of this court. The department and

the intervening parties moved to reserve and report the matter

to the full court, which the petitioner did not oppose. The

matter was reserved and reported to the full court on January

27, 2020.

2. Discussion. a. Standard of review. This court may

set aside or modify an agency's decision if it violates the

Constitution, is in excess of the statutory authority or

jurisdiction of the agency, is based upon an error of law, is

made upon unlawful procedure, is unsupported by substantial

evidence, is unwarranted by the facts found on the record as

submitted, or is arbitrary and capricious, an abuse of

discretion, or otherwise not in accordance with the law. G. L.

c. 30A, § 14 (7).

To enable this court to carry out its judicial review

function, the agency must provide adequate subsidiary findings

and reasoning to support its decision: although the agency may

"evaluate evidence in light of its expertise, it cannot simply
 15

use its expertise as a substitute for evidence in the record"

(citation omitted). Fitchburg Gas & Elec. Light Co. v.

Department of Pub. Utils., 460 Mass. 800, 812 (2011).

Nevertheless, the agency decision is supported by substantial

evidence so long as the record contains "such evidence as a

reasonable mind might accept as adequate to support a

conclusion." Id., quoting G. L. c. 30A, § 1 (6). See G. L.

c. 30A, § 11 (5) ("Agencies may utilize their experience,

technical competence, and specialized knowledge in the

evaluation of the evidence presented to them").

When reviewing an administrative decision, "we must

apply all rational presumptions in favor of the validity of the

administrative action and not declare it void unless its

provisions cannot by any reasonable construction be interpreted

in harmony with the legislative mandate." New England Power

Generators Ass'n, Inc. v. Department of Envtl. Protection, 480

Mass. 398, 408 (2018), quoting Consolidated Cigar Corp. v.

Department of Pub. Health, 372 Mass. 844, 855 (1977). In

analyzing the legislative mandate, we first determine whether

the Legislature has spoken with certainty on the topic in

question by using conventional tools of statutory

interpretation. New England Power Generators Ass'n, Inc., supra

at 404. If the statute is unambiguous, we give effect to the

Legislature's intent. Id. "[I]f the Legislature has not
 16

addressed directly the pertinent issue, we determine whether the

agency's resolution of that issue may 'be reconciled with

the governing legislation.'" Id., quoting Goldberg v. Board of

Health of Granby, 444 Mass. 627, 633 (2005). In making this

determination, "we afford 'substantial deference' to agency

expertise," and will uphold the agency decision "unless a

statute unambiguously bars the agency's approach." New England

Power Generators Ass'n, Inc., supra at 405, quoting Goldberg,

supra.

b. Firm service. The first issue is whether the PPAs

include provisions that contradict Section 83D's "firm service"

requirement. The petitioner argues that they do, pointing to

certain clauses in the PPAs that, under the petitioner's

reading, permit HQUS to interrupt service. Specifically, it

points to (1) the contract provision allowing HQUS to cure

delivery shortfalls; (2) the provision relating to cover

damages; and (3) the provision allowing HQUS to decline to sell

electricity during negative LMP periods. The department and the

interveners counter that these provisions are necessary to deal

with unforeseen shortfalls and other developments beyond its

control, and that including these clauses in the PPAs is

therefore consistent with the purpose of St. 2016, c. 188. We

agree with the interpretation of the department and the

interveners.
 17

In reaching this conclusion, we emphasize that an

interpretation of firm service without interruption to require

no interruptions whatsoever, even if those interruptions are

outside the parties' control, would amount to an otherworldly,

unrealistic interpretation of the statute. See Wallace W. v.

Commonwealth, 482 Mass. 789, 793 (2019). These are twenty-year

contracts; some interruptions over twenty years are unavoidable.

Further, the contingencies in place are reasonable, reflecting

industry practices and practical realities, including the need

to provide electricity during periods of inevitable interruption

and strong disincentives against noncompliance or gamesmanship.

At issue is the meaning of the phrase "without

interruption" in Section 83B's definition of firm service. We

begin by recognizing that this court gives "great deference" to

the department's expertise in cases involving "interpretation of

a complex statutory and regulatory framework." Alliance to

Protect Nantucket Sound, Inc. v. Department of Pub. Utils., 461

Mass. 166, 178 (2011), quoting Cambridge v. Department of

Telecomm. & Energy, 449 Mass. 868, 875 (2007). We must also be

"careful to 'avoid any construction of statutory language which

leads to an absurd result, or that otherwise would frustrate the

Legislature's intent.'" Wallace W., 482 Mass. at 793, quoting

Bellalta v. Zoning Bd. of Appeals of Brookline, 481 Mass. 372,

378 (2019).
 18

While Section 83B defines "firm service," it does not

define "without interruption." Here, the department drew on its

specialized expertise when it explained that, "[g]iven the

nature of electricity transmission, delivery shortfalls will

occasionally happen," and as a result, "any long-term contract

for renewable energy generation requires reasonable provisions

to address them." In essence, the department has interpreted

"without interruption" to mean that energy must have guaranteed

availability to the maximum extent feasible, with contingencies

in place to minimize the impact of unavoidable disruptions, as

opposed to reading the phrase literally to mean without any

interruption whatsoever for any reason at all, even if outside

of the parties' control. The department's interpretation is a

commonsense reading of the statute: the real world is

unpredictable, especially over twenty years, and this court

properly defers to the department's view that at least some

shortfalls are inevitable. "Firm service" (or "firm power") is

a common term in the energy industry and among regulators: the

United States Court of Appeals for the District of Columbia

Circuit has explained that "[f]irm service is contractually

guaranteed; non-firm service is scheduled on an 'as available'

basis and is subject to interruption." Sacramento Mun. Utils.

Dist. v. Federal Energy Regulatory Comm'n, 428 F.3d 294, 295 n.3

(D.C. Cir. 2005). See North Star Steel Co. v. United States, 58
 19

Fed. Cl. 720, 723 n.2 (2003) (firm service means power that is

guaranteed to always be available, while non-firm service may be

interrupted for any reason at any time).

In contrast, it would be absurd, or at least unrealistic,

to force clean energy providers to guarantee that their service

will never be interrupted for any reason: even the petitioner

acknowledges that "occasional delivery shortfalls may occur in a

force majeure context."14 Thus, all the parties understand that

a literal interpretation of "without interruption" is

inappropriate.

The question then becomes whether the particular

contingencies provided in the PPAs to deal with potential

interruptions facilitate the firm service requirement rather

than frustrate it. We examine each in turn.

i. Cure of delivery shortfalls. In ruling that the

delivery shortfall provisions of the PPAs were consistent with

Section 83D's firm service requirement, the department focused

on the fact that the events triggering this clause are outages

and reductions in transmission capacity outside the parties'

control. The department also cited several contract provisions

that minimize opportunities for HQUS or the companies to profit

14Force majeure is defined in section 10.1 of the PPAs, and
includes (among other circumstances) mechanical or equipment
breakdown caused by hurricanes, floods, blizzards, terrorism,
and the like.
 20

from interrupting delivery of electricity through use of the

shortfall delivery clause. For example, the PPAs require any

shortfall deliveries to be made "in the same Contract Year in

which the Curable Delivery Shortfall occurred or in the

immediately succeeding contract year," and any shortfall

occurring in a winter or summer month may only be cured by a

shortfall delivery in another winter or summer month,

respectively.15 The PPAs also provide a formula for reconciling

price differences in the electricity that was supposed to be

delivered and the electricity that was actually delivered,

meaning that any profits that could be made through an

opportunistic breach of the PPAs are likely to be reallocated.

Together with the exclusivity provision, which bars HQUS

from selling energy guaranteed to the companies under the PPAs

to a third party, these requirements restrict the ability of any

party to the PPAs to take advantage of seasonal or time-of-day

price differences. This comports with the department's

interpretation of the firm service requirement. The PPAs

therefore do not contradict the requirement; nor do they create

a "right" for HQUS to interrupt delivery in any period, as the

petitioner contends.

15The PPAs further specify that shortfall energy that was
to be delivered between 8 A.M. and 11 P.M. must be delivered
during this same time frame in such a winter or summer month.
 21

ii. Cover damages. Provisions in the PPAs governing cover

damages also do not permit HQUS to simply not deliver energy and

pay damages instead, as the petitioner argues. On the contrary,

the cover damages clauses provide incentive for HQUS to fulfill

its firm service requirements and to cure any delivery

shortfalls. They are typical of long-term contracts like the

ones before us, as experts for the companies testified in the

departmental proceedings.

Cover damages are triggered by shortfalls outside HQUS's

control, such as those caused by a physical condition of the

transmission line. As the department found in its order, cover

damages help make the companies whole, and also minimize

situations in which the companies are in a position where they

need to purchase power elsewhere. Cover damages are also not

only compensatory: they include penalties. Thus, even if HQUS

could theoretically charge a higher price for its energy

elsewhere, this benefit could be financially outweighed by

having to pay penalties to the companies on top of the value of

the electricity HQUS was to deliver. And as with the shortfall

delivery clause, this portion of the contract must be understood

in light of the exclusivity portions of the PPAs, which restrict

HQUS from selling its hydroelectric generation to other buyers.

The cover damages provisions thus create a favorable

economic outcome for the companies, as HQUS is financially
 22

responsible for any favorable price differences resulting from

the shortfall and any later make-up delivery. It is therefore

unrealistic to assume that HQUS would first commit a breach of

the agreement by selling the power guaranteed the companies

elsewhere, charge a higher price to the third-party buyer, and

still make a profit after both compensating the companies and

paying them penalties.16 Instead, we conclude that the cover

damages provisions in the PPAs further guarantee firm service by

providing a strong incentive for HQUS to deliver energy and

fulfill firm service requirements.

The petitioner also argues that section 9.2(f) of the PPAs

-- which it claims allows for interruptions of up to twenty

percent of the annually contracted-for energy delivery -- goes

beyond the occasional outage to which the department referred in

its order, and cannot comport with the firm service requirement.

The petitioner contends that the department does not support its

conclusion that this provision addresses only what the

department calls "occasional outages" with adequate subsidiary

findings.

16Moreover, it is not the role of this court to read a
contract under the assumption that the parties will shirk their
respective obligations. See Rigs v. Sokol, 318 Mass. 337, 343
(1945) (court's assumption in interpreting contracts is that
parties ordinarily contemplate contract will be performed and
provisions for penalties are "intended as security for
performance and not as a price for the privilege of
nonperformance").
 23

The petitioner's interpretation of section 9.2(f) of the

PPAs is misguided. The petitioner argues that this provision

allows for interruption of service for twenty percent of every

contract year -- i.e., seventy-three days a year for the twenty-

year term of the PPAs -- so long as HQUS remedies the

interruption by way of cover damages. This interpretation reads

this clause in isolation, ignoring all of the other provisions

requiring compliance and penalizing noncompliance. The

petitioner's interpretation of section 9.2(f) denies the reality

that HQUS reaps no benefit from having to pay cover damages

under the agreements, as discussed supra. The twenty percent

figure does not identify a target performance measure, but a

figure identifying a contractual default, triggering all kinds

of other consequences, including those related to financing.17

We therefore reject the petitioner's arguments and conclude

that these provisions are in line with Section 83D's firm

service requirement.

17As the department states in its order, "Section 83D
requires an electric distribution company to demonstrate that
any proposed long-term contract will facilitate the financing of
the clean energy generation resource. To satisfy this
requirement, an electric distribution company need not
demonstrate that the long-term contract is necessary to secure
project financing, only that it will assist in securing project
financing," citing NSTAR Elec. Co., D.P.U. 12-30, at 40 (Nov.
26, 2012); Massachusetts Elec. Co. & Nantucket Elec. Co., D.P.U.
10-54, at 52-53 (Nov. 22, 2010).
 24

iii. Negative LMP periods. Finally, the PPA provisions

allowing HQUS to forgo delivery during negative LMP periods do

not interfere with or contradict Section 83D's firm service

requirement. That is because additional electricity

transmission would not benefit either party during negative LMP

periods.

LMP methodology is "used by electricity market operators

across the country." Black Oak Energy, LLC v. Federal Energy

Regulatory Comm'n, 725 F.3d 230, 233 (D.C. Cir. 2013). LMP is a

way to price a given unit of electricity at a particular time

and location. "Under LMP, the price any given buyer pays for

electricity reflects a collection of costs attendant to moving a

[unit] of electricity through the system to a buyer's specific

location on the grid." Id. at 233–234. See Sacramento Mun.

Util. Dist. v. Federal Energy Regulatory Comm'n, 616 F.3d 520,

524 (D.C. Cir. 2010) ("With an LMP-based rate structure, prices

are designed to reflect the least-cost of meeting an incremental

[unit of demand for energy] at each location on the grid, and

thus prices vary based on location and time"). "The cost of

generation can be thought of as the 'baseline cost' of serving

electricity (known in the industry as 'load') to another

location on the system in a hypothetical, congestion-free

environment. Congestion, in turn, drives up costs because it

requires [electricity providers] to dispatch more expensive
 25

generators to meet demand. The cost of congestion results in

different prices at different nodes of the system, depending on

how congested the wires leading to those nodes are" (citations

omitted). Black Oak Energy, LLC, supra at 234.

The PPAs specify that, if "the LMP at the Delivery Point is

negative, or, in the reasonable opinion of [HQUS], is likely to

become negative, then [HQUS] . . . shall be under no obligation

to schedule or transfer Deliveries of Qualified Clean Energy to

the Delivery Point during such period." Alternatively, Exhibit

D of the PPAs allows the companies to take a credit against the

contract price for negative LMP periods. Given that LMP

measures the value of an additional unit of electricity at a

particular time and location, a negative LMP period is one in

which this value is negative. In other words, at the relevant

time and location, the supply of energy exceeds the demand for

it, and there is a surplus. In such a scenario, it would be

wasteful to deliver additional hydroelectric generation. The

negative LMP provisions therefore comport with Section 83D's

requirement that contracts procured be "cost-effective," Section

83D (d) (5) (iii); see 220 Code Mass. Regs. § 24.03(1), and

provide a form of price protection for the companies and -- by

extension -- ratepayers in the Commonwealth.18

18We disagree with the petitioner's argument that the
department was required to make some subsidiary finding
 26

Beyond the fact that such delivery would be cost-

ineffective, it would also not serve the Legislature's purpose

in enacting Section 83D. It was not the purpose of the

Legislature to require generation of hydroelectric energy for

its own sake; instead, the purpose was to generate clean

electricity that meets the energy demands of the Commonwealth,

thus reducing greenhouse gas emissions and achieving other

environmental goals. See St. 2008, c. 169, preamble; Kain, 474

Mass. at 281-282. Delivering energy during negative LMP periods

serves neither the Commonwealth's energy needs nor the

environmental purposes promoted by Section 83D.

None of the provisions cited by the petitioner and

discussed supra permits unilateral interruptions. They are

instead aimed at maintaining cost-effectiveness and making the

companies and their customers financially whole in case of

interrupted service. We therefore conclude that the

department's interpretation of Section 83D's firm service

requirement was reasonable, and that interpretation was

regarding its conclusion that delivery of energy in these
periods would be wasteful. The concept of negative LMP periods
speaks for itself, and the department's commonsensical
conclusion is one that is reflected in other PPAs and the rules
of system operators. See Barton Windpower, LLC, U.S. Dist. Ct.,
No. 13-CV-5329 (N.D. Ill. June 18, 2018) (explaining custom when
LMP is negative for market participants to stop generating power
or to continue to generate power and sell it to system
operator).
 27

correctly applied to the PPAs in this case.19 The department's

conclusions were supported by substantial evidence, adequate

findings, and sufficient rationale.

c. Hydroelectric generation alone. The next issue is

whether the department's finding that the PPAs provide the

delivery of energy produced through hydroelectric generation

alone was supported by substantial evidence, adequate subsidiary

findings, and sufficient rationale. We conclude that it was.

The record contains "substantial evidence" supporting the

department's finding that the PPAs provide for hydroelectric

generation "alone." For example, the PPAs provide that HQUS is

"solely responsible" for demonstrating that "the Hydro-Québec

Power Resources from which the Products are Delivered are

Qualified Clean Energy Generation Units." The "Hydro-Québec

Power Resources" are the sixty-two specified hydroelectric

19We similarly reject the petitioner's argument that the
PPAs do not identify one or more discrete periods in which HQUS
is to deliver firm service. To the extent discrete periods are
meant to be limited to temporal periods other than the entire
contractual term, as the petitioner claims, each of the PPAs
provides a monthly schedule for the entire twenty-year life of
the agreements that surely meets this requirement. The
department made such a finding in its order. Additionally,
provisions in the PPAs requiring HQUS to cure delivery
shortfalls within a defined shortfall cure period do not invite
interruptions by allowing HQUS to "defer cure anywhere from
[twelve] months and [one] day up to a maximum of [twenty-three]
months and [twenty-nine] days," as the petitioner claims, but
instead provide a remedy for the inevitable occurrence of
interrupted service.
 28

generating stations; "Qualified Clean Energy Generation Units"

are electricity generating facilities "capable of producing

Qualified Clean Energy, or Qualified Shortfall Energy"; and both

"Qualified Clean Energy" and "Qualified Shortfall Energy" are

defined as energy produced by the "Hydro-Québec Power Resources"

and tracked by the NEPOOL GIS "to ensure unit-specific

accounting" of the delivery of hydroelectric energy. The PPAs

thus unambiguously require HQUS to make available to the

companies generation capacity from hydroelectric facilities, and

to continuously verify this generation through a tracking system

(NEPOOL GIS). The PPAs also excuse the companies from accepting

or paying for any certificate from HQUS that does not evince

generation from the specified hydroelectric sources. Beyond

such contractual clauses, the department also made an undisputed

subsidiary finding that HQUS's hydroelectric generation

facilities have adequate capacity to provide the statutorily

mandated 9.45 million MWh of purely hydroelectric generation.

The petitioner argues nonetheless that the department's

reliance on the language of the PPAs and the use of NEPOOL GIS

tracking was insufficient. Instead, the petitioner claims that

the department was required to make a finding that, "under the

laws of physics," energy delivered by HQUS and flowing through

the transmission line comes solely from hydroelectric

generation. The department rejects the contention that it was
 29

required to "predict whether HQUS might breach its contractual

obligation in the future, or expound on 'the laws of physics.'"

Instead, the department's position is that it was sufficient

that the PPAs contractually required HQUS to deliver only

hydroelectrically generated energy. The department explains

that this is the "only analysis that it reasonably could

conduct," because once electricity enters the New England power

grid, it is impossible to distinguish the source of any given

unit of energy, unless there is a dedicated power line for a

given source of electricity. No such dedicated power line was

required by the relevant statute or regulations. Again, we

conclude that the department's interpretation of the statutory

and regulatory requirements is reasonable and supported by the

evidence.

Although framed by the petitioner as a question about the

laws of physics or the sufficiency of the evidence, the issue

whether the PPAs provide for hydroelectric generation "alone" is

necessarily linked to a question of statutory construction,

namely, what it means for electricity to come from

"hydroelectric generation alone." Under Section 83D, the

companies were required to enter into "long-term contracts" to

purchase "hydroelectric generation" deriving "from hydroelectric

generation alone." Sections 83B, 83D (a). See 220 Code Mass.

Regs. §§ 24.02, 24.03(1). If the use of the word "alone" is
 30

important, then the use of the word "generation" -- as opposed

to "transmission" -- is no less significant. Both terms clearly

support the department's interpretation of the statutory and

regulatory requirements.

Fortunately (for this court), the laws of physics are not

in dispute. Nor is there any inconsistency between the laws of

physics and the contractual requirements. See Northern Ind. Pub.

Serv. Co. v. Federal Energy Regulatory Comm'n, 954 F.2d 736, 737

(D.C. Cir. 1992) ("When electricity reaches an intersection of

several alternative transmission paths, it will flow

along . . . guided by the laws of physics rather than the

intention of [contractual] parties . . ."). The petitioner and

the department essentially agree on the physics involved in

transmitting electricity from Canada to Maine for distribution

in Massachusetts.

The department analogizes the physics involved as follows:

"It is like [forty] people pouring water into an Olympic

swimming pool. Someone later drawing water from the pool cannot

distinguish between the molecules contributed by each person.

Not surprisingly, the association of market participants in the

electric grid that helps guide matters affecting the system

calls itself the New England Power Pool (NEPOOL)." In the

Olympic pool analogy, one can identify the individual sources of

water that are poured into the pool, and can therefore measure
 31

what each person is contributing to the pool. One cannot,

however, trace water that is already in the pool to a particular

contributor.

In this vein, the department's order focuses on the fact

that the PPAs require the generation of the purchased

electricity to occur at sixty-two specified hydroelectric

sources. So long as this generation can be verified and the

amount that is generated is received by the companies, the

department does not understand the statute to require that the

delivery system for this electricity (i.e., the transmission

lines) be exclusive of other sources. This is a reasonable

reading of the phrase "hydroelectric generation alone" (emphasis

added), particularly in light of the physics involved. It is

also unclear why imposing the requirement of a dedicated

transmission line for hydroelectric generation would serve the

Legislature's purpose in enacting Section 83D if the fact of

hydroelectric generation can be verified in other ways,

particularly given the additional cost and environmental harm

caused by developing such a line. Such a requirement is absent

from the language of Sections 83B and 83D, which refer only to

hydroelectric generation.20

20The petitioner argues that without ensuring that the
transmitted energy is from hydroelectric generation only, the
Commonwealth would be paying for clean energy that is being used
elsewhere. However, that is a fiction so long as the
 32

In sum, the department's construction of the statute and

the regulations is reasonable and supported by the evidence. It

serves the environmental purposes promoted by the act, and is

consistent with the "laws of physics."

d. NEPOOL GIS tracking system. As discussed supra,

Section 83D (j) requires PPAs to "utilize an appropriate

tracking system to ensure a unit specific accounting of the

delivery of clean energy" to accurately measure progress in

achieving the Commonwealth's environmental goals. The purpose

of Section 83D's tracking requirement is to allow DEP, in

consultation with DOER, to "accurately measure progress in

achieving the commonwealth's [emissions-related] goals."

Section 83D (j). The NEPOOL GIS tracking system employed in the

instant case is the industry standard developed for such

measurement. It has been developed by regulators, and it has

been universally accepted by the industry just for such purpose.

See, e.g., Ferrey, Threading the Constitutional Needle with

Care: The Commerce Clause Threat to the New Infrastructure of

Renewable Power, 7 Tex. J. Oil Gas & Energy L. 59, 62-63 (2011)

(Ferrey) (explaining how tracking systems for renewable energy

Commonwealth is paying for what is being generated, what is
being generated is actually clean energy, and the Commonwealth
maintains ownership of the environmental attributes associated
with that energy. See Jones, 28 Fordham Envtl. L. Rev. at 206-
207.
 33

certificates are essential to success of -- and operation of --

renewable portfolio standard [RPS] programs); N.H. Rev. Stat.

Ann. § 362-F:6 (2014) (mandating electric RPS program to use

NEPOOL GIS certificate tracking).

The department provided a relatively short yet sufficient

explanation of its finding that use of the NEPOOL GIS is

consistent with Section 83D (j). The department concluded that

the use of NEPOOL GIS is "well-established" and that the PPAs

require HQUS to utilize it "in compliance with all relevant

NEPOOL GIS operating rules." The department was entitled to

draw on its expertise to conclude that the NEPOOL GIS is an

appropriate tracking system under Section 83D (j). See New

England Power Generators Ass'n, Inc. 480 Mass. at 405; Goldberg,

444 Mass. at 635. The department's expertise in this arena

includes knowledge and experience specific to the NEPOOL GIS

itself, as the department (formerly the Department of

Telecommunications and Energy Resources) participated in the

development of NEPOOL GIS's operating rules. See New England

Generation Info. Sys., D.T.E. 03-62-A, at 9, 24 n.14 (2004).

Indeed, the department's role in developing the NEPOOL GIS

operating rules was to ensure the NEPOOL GIS's efficacy as an

emissions labeling tool in accordance with the emissions

labeling statute that the department is charged with

administering. See id. at 1; 220 Code Mass. Regs. § 11.06
 34

(2016). These operating rules include rules relating to the use

of certificates for unit-specific tracking of how electricity is

generated as well as rules for coordinating with the department

and DEP. See New England Power Pool Generation System Operating

Rules, Rule 2.1(a) & Appendix 5.3 (Jan. 1, 2020). See also

Alliance to Protect Nantucket Sound, Inc., 461 Mass. at 178

(describing "great deference" owed to department's expertise in

cases involving "interpretation of a complex statutory and

regulatory framework").

The department also concluded that the PPAs provide

sufficient protections to ensure adequate tracking of energy

attributes. The PPAs define "Certificate" as "an electronic

certificate generated pursuant to the [NEPOOL] GIS Operating

Rules . . . to represent certain generation attributes of each

[unit of electricity] generated." The PPAs require HQUS to

"transfer to [the companies] all of the right, title[,] and

interest in and to . . . any and all Certificates[] associated

with Qualified Clean Energy or any Qualified Shortfall Energy."

Further, as discussed supra, the PPAs require HQUS to "comply

with all [NEPOOL] GIS Operating Rules including, without

limitation, such rules relating to the creation, tracking,

recording and transfer of all Environmental Attributes

associated with Qualified Clean Energy or Qualified Shortfall

Energy" purchased under the agreements, where "Environmental
 35

Attributes" is a defined term that refers to "any Certificates

issued pursuant to the [NEPOOL] GIS in connection with Energy

generated by [HQUS's hydroelectric generating systems]."

The record provides additional support for the department's

finding. Specifically, in September 2018, upon request from the

companies pursuant to 310 Code Mass. Regs. § 2.09 (2004), DEP

issued an advisory ruling, concluding that NEPOOL GIS tracking

of energy units and attributes satisfies Section 83D (j)'s

requirements. This ruling was in the record before the

department. While such rulings are not binding, Massachusetts

courts give them deference when they relate to a statute that

the agency is charged with interpreting and applying, and so

long as they are consistent with the text and purpose of that

statute. See Brookline v. Medical Area Serv. Corp., 8 Mass.

App. Ct. 243, 258–259 (1979). Cf. Sullivan v. Sleepy's LLC, 482

Mass. 227, 232 n.11 (2019). It is particularly appropriate to

give weight to DEP's advisory ruling approving of the use of the

NEPOOL GIS, as the stated purpose of Section 83D (j)'s tracking

requirement is to allow DEP to monitor the Commonwealth's

progress in reducing greenhouse gas emissions.

A contrary conclusion -- that NEPOOL GIS is not an

appropriate tracking system for these PPAs -- flies in the face

of industry practice relying on tracking systems to comply with
 36

RPS programs. See New England Generation Info. Sys., D.T.E. 03-

62-A, at 5-9; Ferrey, 7 Tex. J. Oil Gas & Energy L. at 62-63.

NEPOOL GIS not only issues and tracks certificates for all

MWh of generation and load produced in the control area of the

Independent System Operator for New England (ISO-New England),

as well as imported MWh from adjacent control areas, but

provides emissions labeling for the New England load serving

entities by tracking the emissions attributes for the region's

generators. Market participants in New England commonly use and

rely on NEPOOL GIS to track clean energy generation and its

associated environmental attributes, and have long done so.21

Market participants also use NEPOOL GIS to trade renewable

energy credits, which are vital to enforcing RPS programs. See

Ferrey, 7 Tex. J. Oil Gas & Energy L. at 62-63; Jones, 28

Fordham Envtl. L. Rev. at 216-217 & n.8.

The NEPOOL GIS tracking system is not just the industry

standard, but the only mechanism recognized as sufficient to

identify supplier-specific labeling information for identifying

resources. See Massachusetts Elec. Co. & Nantucket Elec. Co.,

D.P.U. 08-51, at 2 & n.7 (June 13, 2013). Concluding that

21DOER relies on NEPOOL GIS to track the Commonwealth's
renewable energy portfolio standards. 225 Code Mass. Regs.
§ 14.09 (2016); 225 Code Mass. Regs. § 15.09 (2014); 225 Code
Mass. Regs. § 16.09 (2019). DEP similarly relies on NEPOOL GIS
to monitor compliance with its clean energy standard. 310 Code
Mass. Regs. § 7.75 (2020).
 37

NEPOOL GIS's tracking system does not satisfy Section 83D's

requirements would require the creation of an entirely new

system, which is both impractical and incompatible with the

Commonwealth's goals to advance renewable energy.22

Because the department's conclusions were supported by

substantial evidence, and the department relied on its expertise

and knowledge of the NEPOOL GIS system to conclude that the

system's tracking mechanism was adequate to "ensure that the

Companies purchase clean energy generation as defined by

statute, and not system energy that contains non-clean energy

generation," we affirm the department's decision.

3. Conclusion. The department applied a reasonable

interpretation of Section 83D's firm service requirement,

concluding that the words "without interruption" must

accommodate the reality of inevitable outages, even while

delivery of energy must be guaranteed to the maximum extent

22Any argument that NEPOOL GIS does not physically track
the energy HQUS will deliver back to the hydroelectric
generation station is a repeat of the argument addressed supra,
i.e., that the PPAs do not adequately ensure that HQUS will
generate and deliver hydroelectric power alone. The
petitioner's arguments seem to misunderstand how the tracking
system works: NEPOOL GIS tracks the attributes associated with
the energy HQUS delivers into the system, while the meters at
the delivery point measure the quantity of energy. Requiring
more, i.e., that the parties ascertain the attributes of the
energy already in the transmission line, or construct a new
transmission line devoted solely to energy generated by HQUS, is
at worst an exercise in futility and at best unnecessary and
cost-ineffective.
 38

possible. The provisions allowing HQUS to cure delivery

shortfalls, pay cover damages for uncured shortfalls, and forgo

delivery during negative LMP periods all comply with this

reasonable interpretation of the statute. The department's

conclusion in this regard, as well as its conclusions that the

PPAs provide for the procurement of energy from hydroelectric

generation alone and that the NEPOOL GIS tracking system is an

appropriate system to meet Section 83D's requirements, were

supported by substantial evidence, adequate findings, and

sufficient rationale. We therefore affirm the department's

approvals of the PPAs pursuant to Section 83D.

So ordered.